All Aboard – Hopefully

Lots of New Yorkers are grumbling about the city’s deteriorating subway system, and with good reason. Increasingly, trains are becoming dirtier, more crowded, and delayed, and these are just the tip of the iceberg for the discontent.

Commuters are often blocked from getting in and from getting off because some riders think that the most desirable place in a subway car is to stand by the doors; others think that holding open the doors at every station, preventing the train from departing, is very cool. In the subways, when it rains it pours, literally, and stations get flooded. Announcements are not only too loud but often unintelligible because of static, trains and platforms generate offensive smells, homeless and others lie across three seats, and there’s no way to predict when a careless or unintended gesture you make will rile the person next to you to the point of becoming violent.

If riding the subways makes you angry and frustrated, be aware that in the coming years we may look back at these times as the good old days. Bloomberg reports that the Metropolitan Transportation Authority (MTA), the state agency in charge of running the city’s subways and buses, issued a blunt warning: that unless the system gets $40 billion for urgently needed repairs, upgrades, and maintenance, the system will sink into a “death spiral.”

Frequent riders are wondering whether it already has.

ASAP – If Not Sooner

NYC Transportation Authority President Andy Byford said that upgrades are needed ASAP, and if the state doesn’t step up to the plate very soon the city will have to go it alone (translation: you and I will foot the entire bill).

“You don’t get the billions you need by just going to Albany with a begging bowl,” he told executives at a Crain’s Magazine breakfast last month. For those who think service can’t get worse, it’s projected that the subway will have a nearly $1 billion deficit by 2022; just imagine what the transportation system will be like if that happens.

Part of Gov. Cuomo’s plan to solve this problem is to charge motorists entering the city’s busiest areas “congestion pricing” fees. Despite these projected fees, Moody’s, the rating service, has downgraded the MTA’s credit rating outlook from stable to negative; Moody’s pointed out that the deteriorating service has led to reduced ridership and therefore lower-than-expected revenues.

Separately, the MTA will vote on raising fares by four percent in January. Legislators are not happy about approving this increase as it would outrage riders who believe that the MTA is wasteful, its budget bloated, and its management incompetent. It would also infuriate other riders who are living on very tight budgets and who simply cannot afford any increase in the fare.

“I don’t know of any business model where people can charge more money for worse service,” a rider from Harlem observed.

Interesting Times

Budget experts say that if the MTA does not get a fare increase, the actual deficit the agency will have to deal with in 2022 would be not $1 billion but $1.6 billion. The interest the MTA is required to pay for its deficit is already haunting the agency. By 2022, debt service – the amount of money the MTA will need to repay the interest and principal on the money it has already borrowed – is projected to increase by 26 percent to $3.3 billion.

Even these days, $3.3 billion is a lot of money. Exactly how much is it? In the case of the MTA’s budget, $3.3 billion is the equivalent of 37 percent of all the fares and tolls that are collected, state Comptroller Thomas DiNapoli said in October.

Because revenues from ridership are lower than expected, most of the fare hikes under consideration, as well as most of the increased fees from Gov. Cuomo’s “congestion pricing” plan, would merely help to pay for annual expenses according to Zero Hedge. In other words, very little would be left over to make the improvements and upgrades that are required.

Of course, if the MTA is forced to borrow more money, the cost of servicing its debt would go still higher, which would leave even less for maintenance and upgrades.

Although Mayor de Blasio has dropped his opposition to the idea of an increase in subway fares, he still has questions about its details.

Musk To The Rescue?

Is it just possible that business titan and entrepreneur Elon Musk has an answer to the mass transit woes of New York and other cities? The founder and head of Tesla and SpaceX, among other high-tech companies, believes that Hyperloop is the solution.

Hyperloop is a high-tech system that takes pedestrians and vehicles below ground in special elevators called “skates” and zips them forward at speeds up to 150 MPH in specially-made tunnels. A one-mile stretch of tunnel that will test this concept was just completed at a cost of $10 million.

The relatively low cost was no coincidence but rather the result of important cost-cutting innovations Musk introduced such as a newly designed higher-powered boring machine, digging narrower tunnels, speeding up dirt-removal, and simultaneous excavation and reinforcement.

According to Musk, a snail moves 14 times faster than the speed of a conventional tunneling machine. “We should be slightly faster,” he said.

The just-completed test tunnel is just one of the projects Musk’s Boring Company is involved with. The company was selected by Chicago to build a 17-mile underground transit system; when completed it will connect downtown Chicago with O’Hare International Airport, the main one in the city. A fringe benefit of Hyperloop would be that as more cars travel in underground tunnels, the congestion above ground would lessen and ease the traffic and delays that plague drivers now.

Even if the concept of Hyperloop works exactly as intended, and even if costs would be contained, and even if New York City wants to move ahead with Hyperloop, it will take years and probably many years until a system can be fully designed and built here.

Meanwhile, the city will continue making repairs and upgrades to the transit system the conventional way at conventional speeds and at conventional costs. If the past is any guide to how this will play out, there will be delays completing the various projects as well as cost overruns.

That the city’s subway system is feeling aches and pains is not surprising. The first underground line was opened in 1904 – 36 years after the first elevated line, the IRT, was opened. Given its age and nonstop use, it’s not surprising that it needs maintenance, repairs, and upgrades.

What is surprising is that there are commuters who think higher fares are a ripoff and that the system could keep functioning without ever making repairs or improvements. Hopefully, this arthritic system will get lubricants it needs to keep functioning safely and effectively well into the future.

 

Sources: amny.com; bloomberg.com;

digitalreview.com; investopedia.com; venturebeat.com; zerohedge.com

 

By Gerald Harris